Facebook
FB 2.48%
is experimenting with new advertising approaches for its Instant Articles platform after publishers encountered challenges generating ad revenue because of restrictions imposed by the social network.

Instant Articles, which Facebook rolled out to all iPhone users last month, allows media companies to publish content directly to Facebook feeds instead of posting links to draw users back to their own websites. Twenty publishers are currently enrolled in the program.

The product is still in its infancy, but publishers including The Washington Post, New York Times and LittleThings.com are finding it difficult to extract as much revenue per article from Instant Articles as they do from pages on their own websites, according to people familiar with the situation.

That’s because of the strict guidelines Facebook has laid down on the type and volume of ads publishers are allowed to sell. For example, the guidelines state that just one “large banner” ad sized 320 x 250 pixels may be included for every 500 words of content. On their own mobile properties, publishers such as The Washington Post would typically include three or perhaps four of those ads alongside a 500-word article.

Facebook is also restricting the type of ads publishers may place in Instant Articles. It will not allow so-called “rich media” ads, the animated or interactive ads that now commonly appear across publishers’ sites.

“You have to analyze many factors to determine the monetization potential. You have fewer impressions per pageview than we presently do, so you have to balance that, and you don’t have all the animation we can sell on our own site,” said Jed Hartman, chief revenue officer at the Washington Post.

Publishers also are not permitted to sell Facebook-only campaigns, but instead must package Instant Articles with other inventory across their websites or other properties. As a result, publishers can’t sell ads in Instant Articles at a premium.

Michael Reckhow, Facebook’s Instant Articles product manager, said the company received feedback from publishers and is now testing out changes to its Instant Articles ads policies, such as allowing more ads per article and ad formats that were barred previously.

“It’s early days with Instant Articles, but one of our principles from the beginning has been to work collaboratively with our publishing partners to understand their needs and shape the product,” Mr. Reckhow said. “We’re currently working closely with publishers to understand how their advertising in Instant Articles compares to the mobile web so we can deliver results, while maintaining a great reading experience for people. We’ve made numerous improvements to the advertising capabilities over the past few months and will continue to iterate based on publisher feedback to improve the product.”

Publishers are entitled to 100% of revenue generated from ads in Instant Articles, provided they sell and serve the ads themselves. If they’d rather have Facebook sell ads on their behalf, publishers get a 70% cut. The advertising format and volume restrictions apply regardless of who sells the ads.

Facebook has become a juggernaut in mobile advertising, with mobile accounting for 78% of the $4.3 billion in ad revenue it generated in the third quarter. The company has billed Instant Articles as a way to improve the news-reading experience on mobile devices, since Instant Articles load faster than a typical webpage. It’s looking for other ways to partner with news publishers, and on Wednesday launched an app called Notify which allows smartphone users to opt-in to receive push notifications from various media outlets and online services.

Despite the Facebook restrictions and the growing pains in generating ad revenue, many publishers are still confident Instant Articles will benefit them in the long-run because of its potentially huge scale. If Facebook pumps that content into users’ feeds at a higher rate than links to publishers’ sites, Instant Articles audiences could become so large that the limitations on ad sales won’t matter, the optimists say.

Sites that rely heavily on Facebook for a large percentage of their traffic have a strong incentive to participate in Instant Articles. If they don’t, and it becomes the primary mode of distribution on the social network, they could lose out.

“The hope is that Instant Articles gives publishers way more traffic to make up for the lower monetization potential,” said Joe Speiser, co-founder of LittleThings.com, which publishes “feel-good” stories and videos largely optimized for social sharing.

LittleThings.com sees around 80% of its traffic from Facebook and has recently begun publishing Instant Articles. “It all comes down to how Facebook prioritizes this in news feed. We’ve seen them prioritize video, and if they do anything similar with Instant Articles the numbers could go through the roof.”

Mr. Hartman of the Washington Post pointed out that Instant Articles are less susceptible to ad-blockers, which have been making life difficult for online publishers, and offer an improvedexperience for users.

“The assumption is if you’re giving someone a slicker, faster, more convenient way of engaging with content then you’ll have strong consumer demand and increased socialization, and that will lead to a bigger audience,” Mr. Hartman said.

For now, publishers are experimenting with different advertising options in the hope they can find a sustainable model. Some executives say they’re beginning to allow Facebook to sell some of their Instant Articles inventory, in part because Facebook has extremely powerful data with which it can target and track ads.

“It’s new, so we’re learning how it all works and optimizing,” Mr. Hartman said.

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